Online advertising has seemingly weathered the recession better than almost any other sector of the industry. It was however, probably to be expected that not all of online worlds myriad routes to market would come through unscathed. Unsurprisingly it has been display advertising which appears to have suffered most from the present economic woes, having according to a report in marketing magazine (and quoted here on the BrandRepublic site,) registering its first decline for 9 years.
What we’re talking about here is good old fashioned CPM (cost per thousand) advertising, and the sites that attract the majority of this spend. Display advertising has been hard hit by other forms of online advertising which offer marketeers and agencies metrics from which is it is far easier to calculate the supposed return on investment.
Search spending continues to increase, and despite the pressure on networks overrides, more is apparently being pumped into affiliate marketing. As argued previously (and possibly too often) in this blog, these are forms of promotion which are targeting an audience with a good idea of what it wants. Whether this be in the form of paid search sitting around specific brand or generic terms, or giving people money back or points for products that they already had an interest in buying.
Online display is in a tricky position when faced not only with other online products, but also with the proven brand building power of TV. TV might not be the most interactive of mediums, but back when it was an almost universal past time, effectiveness of adverts could measured in increased footfall and how quickly certain product lines found themselves making their way from the shelves and into the shopping baskets.
The emergence of such terms as ‘banner blindess’ speak volumes of how the medium has failed to engage with audience, and how this is impacting on the mass market sites such as newspapers and big portals for which display remains one of the largest sources of revenue. Behavioural targeting and dynamic retargeting appeared to offer a way for advertisers to more effectively reach those who had shown an interest in their products through display, but the impact so far appears to be less than hoped for, and I would be interested to know how much leakage there is from such to paid search and affiliates and what can be done to measure and account for that.
Against this background, I can’t help but think that the display market will remain stagnant for some time to come, at least until someone brighter than me can think of a way in which either it becomes a more successful brand building medium (with an approved metric for measurement) or that the CPM model itself is made redundant and subsumed into a performance measurement.
There have certainly been a number of innovations in the display market recently. The arrival of the big American aggregation house such as Rubicon and Admeld, have made for a more optimal distribution of premium CPMs, but to me haven’t actually addressed the central problem of increasing engangement and audience value, merely creating a more level playing field for publishers to get their dibs on higher yielding banners. This hasn’t helped though create more demand for high yielding banners.
Against this backdrop its easy to understand Rupert Murdoch’s decision to introduce the paywall around ‘The Times’ & ‘Sunday Times’ sites, with further details now being revealed. Crudely put, if you can’t make money by pushing to your audience, perhaps you can make up the shortfall by pulling from them in terms of daily or weekly subscriptions.
The NMA’s Suzanne Bearnes at least seems to think that this makes sense (as can be seen here,) for me though it does seem to be a very crude way of making the content pay for itself. I could be wrong, and it might prove to be a big success, certainly it won’t have to achieve the sort of traffic levels that are currently being seen for it turn a profit, but just the idea of complusory registration and payment for content very similar to that available elsewhere doesn’t strike me personally as very compelling.
The paywall will undoubtedly however have the side effect of raising the yield for the two titles sites. Not only will be there much less display inventory available, but profiling will increase targeting and reduce if not eliminate entirely any reliance on blind backfill.
It’s possible that available invenetory will decline so much that competitors such as The Guardian and The Telegraph might receive a temporary fillup from committed premium budgets that have nowhere else to go. It is always though rash to predict the results of an experiment before it has taken place, and so I’m quite prepared to be proved wrong.
So what are my conclusions from all this. Well I feel that it is certain that display even if reprieved temporarily by improving economic condition will continue to be tested. I also believe that the audiences of the large sites are great places for branding, the mechanism to acheive this though has yet to be developed.
Rob, Founder, On-e